SAN FRANCISCO--Will Microsoft one day dominate the mobile software market as it has the PC market for the past two decades?

CEO Steve Ballmer clearly sees big opportunities for the software giant. As millions of consumers acquire cell phones, and as cell phones become more capable, it's a natural extension of Microsoft's core business selling PC operating systems and applications.

But then there's Apple and Google and Symbian and others with big plans for the mobile software market. Ballmer sees Microsoft's unique role as bridging the consumer and business markets to provide a more compelling "experience" for phone buyers.

At this week's CTIA conference here, Ballmer told CNET News.com about some of Microsoft's plans, what he likes about the iPhone, and why he thinks Vista is already a success, no matter what you might have heard.

Q: You mentioned that for many people in many parts of the world, their first computing experience is going to be a phone. That seems like it would have some pretty broad implications for Microsoft. What does that mean for the company?
Ballmer: I think in most parts of the world people will aspire to have a phone and a PC. And yet if you look at the bottom of the emerging middle class in places like China, the 800 millionth richest person in the country, you're going to find somebody who might have, you know, $50 or $100 they'll be able to scrape together for a capital expense. We're going to want to work on experiences that, it may not be a PC but it will be able to dock and become part of the way people think about PC infrastructure. When we have something to announce we'll announce it, but it's a very important concept to us.

I would say Apple has done a nice piece of work in the ability to gesture and have it mean something.

You talked at CTIA about Apple not being an enterprise company and IBM not being a consumer company. Some might say it's hard to do both. Why is it important for Microsoft (to do both)?
Ballmer: I think what most consumers want, what most end users want, actually, is things that do help them bridge the gap. I don't really think most people want to live in a world where there's parallel kind of universes--my universe at home, my universe at work. It's simpler if I can learn one thing. I actually think that's a feature, an advantage. Certainly you see that in the PC. Windows PCs, they're quite popular compared to anything else precisely because they do span the kind of work/home gap.

Video:
From CTIA, Ballmer talks about the importance of Windows Mobile and how he sees it evolving.

Is it fair to say you guys are farther ahead on the business piece of that than on the consumer piece?
Ballmer: In the mobile area, there's no doubt. We started first by focusing in on productivity, and in the enterprise space we've moved now to kind of enterprise devices also having a consumer side to them. With the HTC Touch device, you're starting to get something that's more purely a consumer type device. We're putting more and more emphasis on the kind of entertainment-style applications.

You mentioned it's not necessarily a good thing that people are carrying around multiple phones just because one does one thing well and one does something else, such as e-mail. What do you think Microsoft and the industry have to do to improve that situation?
Ballmer: We have to work on software that can support the experiences that are important in both places. We've got to have distribution (and) sales models that let consumers pick somehow what they want. Or, at least have enterprises give them some range of choice, the way people do on PCs, to participate in enterprise infrastructure and yet also be able to store and keep people's personal information. I think that's a key part of it. We may wind up in a world where a number of people carry two devices if they want to, or if their businesses want them to, which is fine also.

Do you see the need for Microsoft to have a more purely consumer-oriented phone?
Ballmer: Would I expect us to have enterprise and consumer phones whose primary characteristic is, in some cases, productivity and in some cases entertainment? Yeah. I'd expect us to have Windows Mobile in devices that have all four of those personalities.

Will you approach the consumer market with something from the Windows Mobile brand, or do you think that's something you might see from the Zune side of the house?
Ballmer: I think you ought to think about Windows Mobile as the direction we're headed in terms of these phones.

Obviously, there's a lot of talk around the iPhone. When you look at the iPhone, what are the things that you say to the team, 'OK, this is an area we need to focus on'?
Ballmer: They've (Apple) done some nice work and they've got their own set of challenges. And we note both of those. Many people think they did a nice job with the gestures UI, you know, hats off to them. That doesn't mean it's perfect. But there is some stuff that they've done that's quite nice.

So multitouch is something you can imagine seeing on mobile devices?
Ballmer: Multitouch is yet another issue. But I think the most important thing...I would say Apple has done a nice piece of work in the ability to gesture and have it mean something.

What about full Web browsing? I mean, that seems to be the one feature of the iPhone that would also benefit business users.
Ballmer: It sure would.

How big of an issue is security on mobile devices as they are getting more powerful?
Ballmer: I think both for people in their personal lives and in their professional lives it's actually pretty important, for different reasons. You know, I don't want my personal data all over the place, I don't want people looking at my bill, I don't want a lot of things on the personal side. On the professional side, of course, all the issues of corporate compliance and security etc. all come into being, so I think security is a big deal both in the personal and professional context.

About the author

During her years at CNET News, Ina Fried has changed beats several times, changed genders once, and covered both of the Pirates of Silicon Valley. These days, most of her attention is focused on Microsoft. E-mail Ina.
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